City of London Investment Group PLC FUNDS UNDER MANAGEMENT - Trading Update (1943N)
January 16 2019 - 1:00AM
UK Regulatory
TIDMCLIG
RNS Number : 1943N
City of London Investment Group PLC
16 January 2019
RNS Number:
City of London Investment Group PLC
16 January 2019
CITY OF LONDON INVESTMENT GROUP PLC
("City of London", "the Group" or "the Company")
FUNDS UNDER MANAGEMENT AS AT 31 December 2018,
TRADING UPDATE
City of London (LSE: CLIG), a leading specialist asset
management group offering a range of institutional products
investing in closed-end funds, announces that as at 31 December
2018, FuM were US$4.6 billion (GBP3.6 billion). This compares with
US$5.1 billion (GBP3.9 billion) at the Company's year-end on 30th
June 2018. A breakdown by strategy follows:
FuM ($mn) Strategy Index
Dec-18 Jun-18 % Net %
(estimate) inc/dec Flows inc/dec
EM 3,734 4,207 -11% (157) MSCI EM -8%
DEV 495 481 3% 95 MSCI ACWI -9%
Frontier 197 245 -20% (21) MSCI Frontier -6%
Opportunistic ACWI/Barclays
Value 199 174 14% 41 Global Agg -4%
------
4,625 5,107 (42)
--------------- ------- ------- -------- ------ --------------- --------
The EM strategy outperformed due to narrowing discounts and good
country allocation over the period.
Negative relative investment performance was recorded across
Developed, Opportunistic Value and Frontier strategies. Generally,
a combination of NAV performance and discount widening, relating to
year-end tax-loss selling in the US, affected relative
performance.
During the period under review, the Developed and Opportunistic
Value strategies recorded combined net inflows of $136 million. The
EM and Frontier strategies saw net outflows of $157 million and $21
million, respectively.
During the most recent period of volatility, we have to date
received notification of $125 million of net inflows in aggregate
across all strategies, which we expect to be funded over the next
quarter.
With regard to business development, the Group continues to
maintain an active pipeline across all of its major CEF offerings,
with increased interest continuing to be seen in the non-Emerging
Market CEF strategies (i.e. Developed, Opportunistic Value).
Operations
The Group's income currently accrues at a weighted average rate
of approximately 77 basis points of FuM, net of third party
commissions. "Fixed" costs are cGBP1.1 million per month, and
accordingly the current run-rate for operating profit, before
profit-share of 30% and an estimated EIP charge of 5%, is
approximately GBP1.2 million per month based upon current FuM and a
US$/GBP exchange rate of US$1.275 to GBP1 as at 31 December
2018.
The Group estimates the unaudited profit before taxation for the
six months ended 31 December 2018 to be approximately GBP5.2
million, which compares with GBP6.6 million for the equivalent
period to 31 December 2017.
The Company is currently in a close period which will end with
the publication of results for the six months ended 31 December
2018 on 18 February 2019.
Template
Please see the attached graph which is based on the following
assumptions and includes the estimated quarterly cost of a
maintained dividend:
http://www.rns-pdf.londonstockexchange.com/rns/1943N_1-2019-1-15.pdf
Key assumptions:
(June 2018 comparatives in Italics)
- Starting point Current FuM (end December 2018)
- Net increase for the remainder of this financial year (straight-lined
to June 2019):
* emerging market CEF strategy US$50m (zero)
* non-emerging market CEF strategies US$50m (US$250m
over the full year)
Net increase in 2019/2020 (straight-lined to June 2020):
* emerging market CEF strategy US$50m
* non-emerging market CEF strategies US$50m
- Operating margin adjusted monthly for change in product mix
and commission run-off
- Market growth: 0%
- Overheads for 2018/19: +4% compared to 2017/18 (+3%)
- Overheads for 2019/20: +4% compared to 2017/18
- EIP cost for 2018/19: 5% of operating profit (4%)
- EIP cost for 2019/20: 5% of operating profit
- Corporation tax based on an estimated average rate of 20%
(20%)
- Exchange rate assumed to be GBP1/$1.275 for entire period
(GBP1/US$1.32)
- Number of CLIG Shares in issue (26.7m) less those held by
the ESOP Trust (1.4m) as at 31 December (26.9 m CLIG shares
in issue less 1.5m ESOP Trust holding)
For further information, please visit http://www.citlon.co.uk/
or contact:
Barry Olliff, CEO
City of London Investment Group PLC
Tel: 001 215 313 3774
Martin Green
Zeus Capital Limited
Financial Adviser & Broker
Tel: +44 (0)20 3829 5000
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contact rns@lseg.com or visit www.rns.com.
END
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